The wheels come off

Criticism of Mayor Gavin Newsom's handling of the city's budget crisis has intensified since the mayor refused to attend consensus-building sessions at City Hall, instead choosing to promote his gubernatorial bid and push a flawed "local economic stimulus package" that will only make the deficit larger.

The wheels began to come off Newsom's public relations machine when news hit that Newsom refused to attend roundtables that board president David Chiu convened to discuss the city's financial emergency. These meetings marked the first time business and labor leaders were brought together since the mayor announced the city's $575 million deficit two months ago.

"I've asked the mayor to convene these meetings, but obviously that hasn't happened," Chiu told the Guardian last week. "He has said he plans to convene them soon."

Insiders say Chiu was told that the mayor, his chief of staff, and his budget analyst will not attend the roundtables until a June special election is off the table, but that Newsom is open to considering revenue measures for a November election. As a compromise, Chiu proposed moving the election to late summer.

Mayoral spokesperson Nathan Ballard told the Guardian that the mayor has been holding a series of meetings with labor, business, elected officials, and community leaders on the budget, but Ballard hasn't yet fulfilled the Guardian's Sunshine Ordinance request for details and documents connected to those meetings.

"Some of those meetings have included Supervisor Chiu and other supervisors," Ballard said. "However, the mayor is not scheduled to attend meetings about a summer special election to raise taxes, which he opposes."

That position places Newsom squarely with the business community, which continues to maintain that it is too early to develop revenue measures and that structural budget reforms should be considered first.

On Jan. 29, Steve Falk, executive director of the San Francisco Chamber of Commerce, wrote to Chiu that "Any action to call a special election without the specifics of proposed tax measures and Charter amendments would be premature and doomed to failure. City government can take steps that either help to stimulate a quick recovery or, through the wrong actions, extend the downturn by placing greater burdens on local employers."

But labor groups believe that revenue boosts are necessary if San Francisco is to weather the economic tsunami, and that it's unreasonable to demand that their members give back millions in negotiated pay raises while forgoing revenue options. These concerns, attendees report, are publicly aired at Chiu's roundtables, and Newsom's refusal to participate has left city workers feeling alienated.

"He wants Labor to come to the table, but the problem is, his whole approach is all stick and no carrot, all doom and gloom and no hope that there is revenue on the horizon," SEIU Local 1021's Robert Haaland told the Guardian.

Noting that labor anticipates 2,500 layoffs in the coming year, on top of the 400 city workers who were laid off this month, Haaland said, "Our people provide frontline services. This is about the wheels of government coming off."

Sup. Bevan Dufty, who participated in Chiu's roundtables with Sups. John Avalos and Sean Elsbernd, praised Chiu for bringing together stakeholders, even as he extended hope that Newsom will assume the leadership role. "It always helps to have people face-to-face," Dufty said. "David primed the pump, got people to start talking. I'm looking forward to the mayor taking it to the next level."

Dufty said Newsom was "disappointed with the board's override of his veto [of the June special election], doesn't see a June election working, and doesn't understand why the board is reluctant to let it go.... But from our point of view, it's hard to ask employees to give back $90 million in negotiated benefits if they are going to be laid off in three months anyway."

Falk, who represents almost 2,000 local businesses, wrote that "The business community recognizes that a $500 million budget shortfall can only be bridged through a combination of reductions in the size of city government, program consolidations, work-rule reforms, and new fees and revenues. However, any solution must be the product of discussions with all affected parties at the table. To date, these meetings have not happened."

Chiu replied to that letter by inviting key business and labor groups to his Feb. 8 City Hall roundtable. Attendees report that a productive dialogue ensued, and two days later, when the board overturned Newsom's veto of its special election legislation, the impacts of that first roundtable were palpable.

"I respect the mayor's perspective, but I believe that by getting on with the election, less damage will be done," Chiu explained as the supervisors pushed ahead with their plans to hold a special election this summer.

Elsbernd opposed the election but expressed frustration with the current situation: "The city is facing a multi-year problem. People are missing the big picture here. I don't want to be part of brokering a deal that is simply going to be a Band-Aid. Let's fix the problems now. "

"You could tell the impact of Sean having sat in on the discussions," Dufty observed. "Instead of 'Get over it, this is the way it's going to be,' he understands that we have to work together."

Falk told the Guardian that he found Chiu's roundtable "very productive."

"Everyone is feeling the pain of this recession," Falk continued. "People are losing jobs, businesses are losing sales, which results in layoffs, which results in a bigger strain on the city's services. It's all connected."

But he also noted that a special election on taxes requires a two-thirds vote. "That is a very difficult hurdle," Falk noted, "which is why we have to consider all the pieces, and as we do, the more we realize that June is out of the question."

Chiu continues to reach out to his critics, countering arguments that a special election will cost $3.5 million  and will be impossible to do by summer  with the observation that, done right, it could result in $50 million to $100 million in additional revenues and thereby spare some vital jobs and programs.

"We're facing a $565 million budget deficit, so if we can raise $100 million, we'll still have to cut $465 million. But it would save us from making the most painful cuts," Chiu said, noting he would support pushing the election to no later than Aug. 31 "if there were more firm agreement on elements of a plan that must include structural reforms, layoffs and wage concessions, and new revenues."

But Ballard said, "The mayor doesn't support more revenue without real reform," while promising that Newsom would shortly announce "new cost-saving reforms."

Unveiled the next morning, Feb. 11, during a mayor's breakfast with business leaders, Newsom's so-called local economic stimulus package included more spending on tourism marketing, targeted reduction in the payroll and property taxes, a $23 million interest-free revolving loan program for local businesses, and tax relief for Healthy San Francisco participants. The package, which must be approved by the board, would actually increase the city's budget deficit.

Chiu says he is open to discussing most ideas in Newsom's economic stimulus package, but that he's concerned about widening the deficit, telling us, "That is why this needs to be done in the context of an overall revenue package and not in a vacuum."